8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):October 25, 2017

                        INTERFACE, INC.                         

(Exact name of Registrant as Specified in its Charter)

Georgia	001-33994	58-1451243
(State or other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(IRS Employer Identification No.)

2859 Paces Ferry Road, Suite 2000 Atlanta, Georgia	30339
(Address of principal executive offices)	(Zip code)

Registrant's telephone number, including area code:  (770) 437-6800

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On October 25, 2017, Interface, Inc. (the "Company") issued a press release reporting its financial results for the third quarter of 2017 (the "Earnings Release").  A copy of the Earnings Release is included as Exhibit 99.1 hereto and hereby incorporated by reference.  The information set forth in this Item 2.02, including the exhibit hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS.

(a)Financial Statements of Businesses Acquired.

None.

(b)Pro Forma Financial Information.

None.

(c)Shell Company Transactions.

None.

(d)Exhibits.

Exhibit No.	Description
99.1	Press Release of Interface, Inc., dated October 25, 2017, reporting its financial results for the third quarter of 2017 (furnished pursuant to Item 2.02 of this Report).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INTERFACE, INC.
By:	/s/ David B. Foshee
	David B. Foshee
	Vice President
Date:  October 25, 2017

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of Interface, Inc., dated October 25, 2017, reporting its financial results for the third quarter of 2017 (furnished pursuant to Item 2.02 of this Report).

EX-99.1

FOR IMMEDIATE RELEASE

Media Contact:

Christine Needles

Global Corporate Communications

Christine.Needles@interface.com

+1 404-491-4660

Investor Contact:

Bruce Hausmann

Chief Financial Officer

Bruce.Hausmann@interface.com

+1 770-437-6802

Interface Reports Third Quarter 2017 Results

-- Earnings Per Share of $0.32 --

-- GAAP Net Sales Up 3.7%; Organic Sales Up 3.9% --

-- An Additional $25 Million of Share Repurchases in the Quarter --

ATLANTA – October 25, 2017 – Interface, Inc. (Nasdaq: TILE), a worldwide modular flooring company and global leader in sustainability, today announced results for the third quarter ended October 1, 2017.

"We delivered another solid quarter consistent with our expectations and in line with full year commitments. Organic order growth increased 6.5% versus last year driven equally by our core carpet tile and our new LVT product lines," said Jay Gould, CEO of Interface. "Despite input cost inflation, our gross margin was solid because of strong productivity initiatives. And, our operating margin increased to 12% as we held SG&A to 26.3% of sales. Our value creation strategy is yielding the expected results." 

Third quarter highlights include:

· On a GAAP basis, net sales grew 3.7% year over year. Organic sales, which adjusts for the impact of foreign currency fluctuations and exiting the FLOR specialty retail stores, grew 3.9% year over year. Organic order growth was 6.5% year over year.

· Gross margin remained in line with expectations at 38.3%.

· SG&A of $67.6 million, or 26.3% of net sales, was on pace with the Company's full year target.

· Operating income margin of 12.0% was an increase of 160 basis points over the third quarter last year.

· The Company completed an additional $25 million of stock repurchases in the third quarter, executing on the previously announced $100 million share repurchase program.

With the fundamentals in place, Interface affirms its full year plan targeting 3-4% top line growth, 38.0-38.5% gross margin, and $260-265 million in SG&A expenses for 2017.

Third Quarter 2017 Financial Summary & Highlights

Sales: On a GAAP basis, third quarter net sales were $257.4 million, up 3.7% over the prior year period on broad-based growth, with all regions showing improvement during the quarter.

Organic order growth, which adjusts for the impact of foreign currency fluctuations and exiting the FLOR specialty retail stores, was up 6.5% year over year. Both the core carpet tile business and the new LVT modular resilient flooring business contributed relatively evenly to organic order growth.

Operating Income: Third quarter operating income was $30.9 million, or 12.0% of sales, compared with operating income of $25.7 million, or 10.4% of sales, in the prior year period.

Gross margin was 38.3% for the third quarter, an increase of 90 basis points over the prior year period. This increase is a result of productivity enhancements delivering margin expansion greater than the negative margin impact of exiting the FLOR specialty retail stores.

The Company continues to effectively manage expenses with third quarter SG&A of $67.6 million, or 26.3% of sales, compared to $67.2 million, or 27.0% of sales, in the third quarter of 2016. This improvement as a percent of sales is due to enhanced spending discipline, as well as repurposing SG&A from the exited FLOR specialty retail stores to the core carpet tile business and recently launched LVT business.

Net Income: Net income during the third quarter of 2017 was $19.4 million, or $0.32 per diluted share, an increase over the prior year period net income of $15.9 million, or $0.25 per diluted share. 

Year to Date 2017 Financial Results

Sales:  On a GAAP basis, for the first nine months of 2017, net sales were $730.2 million, up 1.5% compared with $719.1 million during the same period last year. Organic sales, which adjusts for the impact of foreign currency fluctuations and exiting the FLOR specialty retail stores, grew 3.0% over the same period.

Operating Income:  On a GAAP basis, the Company reported year to date 2017 operating income of $79.3 million, or 10.9% of sales, which included previously announced restructuring and asset impairment charges. Excluding these charges, year to date 2017 operating income was $86.6 million, or 11.9% of sales, versus $78.6 million, or 10.9% of sales in the same period of 2016.

Net Income:  On a GAAP basis, the Company reported net income of $48.9 million, or $0.78 per share, for the first nine months of 2017, which included previously announced restructuring and asset impairment charges. Excluding these charges, the Company reported net income of $53.6 million, or $0.86 per share, for the first nine months of 2017 versus $49.5 million, or $0.76 per share, for the first nine months of 2016.

Webcast and Conference Call Information

The Company will host a conference call tomorrow morning, October 26, 2017, at 9:00 a.m. Eastern Time, to discuss its third quarter 2017 results. The conference call will be simultaneously broadcast live over the Internet.

Listeners may access the conference call live over the Internet at the following address: https://edge.media-server.com/m6/p/grv67m89

or through the Company's website at: http://www.interfaceglobal.com/Investor-Relations.aspx. The archived version of the webcast will be available at these sites for one year beginning approximately one hour after the call ends.

About Interface

Interface, Inc. is the world's largest manufacturer of modular carpet,and recently expanded into modular resilient flooring with a new luxury vinyl tile line. Our hard and soft tiles are designed to work together in an integrated flooring system. We are committed to sustainability and minimizing our impact on the environment while enhancing shareholder value. Our mission, Climate Take Back™, focuses on driving positive impacts in the world to create a climate fit for life.For additional information: interface.com and blog.interface.com. Follow Interface on Twitter, YouTube, Facebook, Pinterest, LinkedIn, Instagram, and Vimeo.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

Except for historical information contained herein, the other matters set forth in this news release are forward‑looking statements. The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including risks and uncertainties associated with economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed under the heading "Risk Factors" included in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2017, which discussion is incorporated herein by this reference, including, but not limited to, the discussion of specific risks and uncertainties under the headings "Sales of our principal products have been and may continue to be affected by adverse economic cycles in the renovation and construction of commercial and institutional buildings," "We compete with a large number of manufacturers in the highly competitive floorcovering products market, and some of these competitors have greater financial resources than we do," "Our success depends significantly upon the efforts, abilities and continued service of our senior management executives and our principal design consultant, and our loss of any of them could affect us adversely," "Our substantial international operations are subject to various political, economic and other uncertainties that could adversely affect our business results, including by restrictive taxation or other government regulation and by foreign currency fluctuations," "Concerns regarding the European sovereign debt crisis and market perceptions about the instability of the euro, the potential re-introduction of individual currencies within the Eurozone, the potential dissolution of the euro entirely, or the U.K. exiting the European Union, could adversely affect our business, results of operations or financial condition," "Large increases in the cost of petroleum-based raw materials could adversely affect us if we are unable to pass these cost increases through to our customers," "Unanticipated termination or interruption of any of our arrangements with our primary third party suppliers of synthetic fiber could have a material adverse effect on us," "We have a significant amount of indebtedness, which could have important negative consequences to us," "The market price of our common stock has been volatile and the value of your investment may decline," "Our earnings in a future period could be adversely affected by non-cash adjustments to goodwill, if a future test of goodwill assets indicates a material impairment of those assets," "Our business operations could suffer significant losses from natural disasters, catastrophes, fire or other unexpected events," and "Our Rights Agreement could discourage tender offers or other transactions for our stock that could result in shareholders receiving a premium over the market price for our stock." Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made.  The Company assumes no responsibility to update or revise forward-looking statements made in this press release and cautions readers not to place undue reliance on any such forward-looking statements.

- TABLES FOLLOW -

Consolidated Condensed Statements of Operations	Three Months Ended				Nine Months Ended
(In thousands, except per share data)	10/1/17		10/2/16		10/1/17		10/2/16
Net Sales	$	257,431	$	248,349	$	730,233	$	719,110
Cost of Sales		158,887		155,431		445,990		440,434
Gross Profit		98,544		92,918		284,243		278,676
Selling, General & Administrative Expenses		67,633		67,175		197,660		200,108
Restructuring and Asset Impairment Charges		--		--		7,299		--
Operating Income		30,911		25,743		79,284		78,568
Interest Expense		1,851		1,654		5,150		4,763
Other Expense (Income), Net		651		739		1,816		1,072
Income Before Taxes		28,409		23,350		72,318		72,733
Income Tax Expense		8,970		7,446		23,394		23,278
Net Income	$	19,439	$	15,904	$	48,924	$	49,455
Earnings Per Share – Basic		$0.32		$0.25		$0.78		$0.76
Earnings Per Share – Diluted		$0.32		$0.25		$0.78		$0.76
Common Shares Outstanding – Basic		61,018		64,805		62,630		65,285
Common Shares Outstanding – Diluted		61,060		64,842		62,672		65,322
Organic Orders	$	255,200	$	239,500	$	749,200	$	710,300

Consolidated Condensed Balance Sheets
(In thousands)	10/1/17		1/1/17
Assets
Cash	$	78,108	$	165,672
Accounts Receivable		133,869		126,004
Inventory		186,126		156,083
Other Current Assets		24,358		23,123
Total Current Assets		422,461		470,882
Property, Plant & Equipment		212,332		204,508
Other Assets		167,606		160,049
Total Assets	$	802,399	$	835,439
Liabilities
Accounts Payable	$	52,313	$	45,380
Accrued Liabilities		101,346		98,703
Current Portion of Long-Term Debt		15,000		15,000
Total Current Liabilities		168,659		159,083
Long-Term Debt		219,506		255,347
Other Long-Term Liabilities		82,042		80,280
Total Liabilities		470,207		494,710
Shareholders' Equity		332,192		340,729
Total Liabilities and Shareholders' Equity	$	802,399	$	835,439

Consolidated Condensed Statements of Cash Flows	Three Months Ended						Nine Months Ended
(In thousands)	10/1/17			10/2/16			10/1/17			10/2/16
Net Income	$	19,439		$	15,904		$	48,924		$	49,455
Depreciation and Amortization		7,781			7,514			22,203			22,474
Stock Compensation Amortization		2,658			1,041			4,479			3,390
Deferred Income Taxes and Other Non-Cash Items		3,056			559			5,926			5,049
Change in Working Capital
Accounts Receivable		4,891			(219	)		(1,397	)		1,449
Inventories		(1,290	)		5,715			(22,377	)		(454	)
Prepaids and Other Current Assets		14			(434	)		(653	)		(1,008	)
Accounts Payable and Accrued Expenses		9,415			14,269			10,804			(1,462	)
Cash Provided from Operating Activities		45,964			44,349			67,909			78,893
Cash Used in Investing Activities		(8,184	)		(8,555	)		(23,230	)		(19,722	)
Cash Used in Financing Activities		(28,289	)		(11,252	)		(137,612	)		(22,704	)
Effect of Exchange Rate Changes on Cash		1,833			873			5,369			1,616
Net Increase (Decrease) in Cash	$	11,324		$	25,415		$	(87,564	)	$	38,083

Reconciliation of Non-GAAP Performance Measures to

GAAP Performance Measures

(In millions, except per share amounts)

	Three Months Ended 10/1/17
Net Sales with Foreign Currency Held Neutral (organic sales)	$	253.4
Impact of Changes in Foreign Currency		4.0
Specialty Retail Sales		0.0
Net Sales, As Reported	$	257.4
	Nine Months Ended 10/1/17
Net Sales Excluding Specialty Retail and with Foreign Currency Held Neutral (organic sales)	$	726.5
Impact of Changes in Foreign Currency		(1.0	)
Specialty Retail Sales		4.7
Net Sales, As Reported	$	730.2
	Three Months Ended 10/2/16
Net Sales Excluding Specialty Retail (organic sales)	$	244.0
Specialty Retail Sales		4.3
Net Sales, As Reported	$	248.3
	Nine Months Ended 10/2/16
Net Sales Excluding Specialty Retail (organic sales)	$	705.3
Specialty Retail Sales		13.8
Net Sales, As Reported	$	719.1

	Nine Months Ended 10/1/17
Operating Income, Excluding Restructuring and Asset Impairment Charges	$	86.6
Restructuring and Asset Impairment Charges		(7.3	)
Operating Income, As Reported	$	79.3

	Nine Months Ended 10/1/17
Net Income, Excluding Restructuring and Asset Impairment Charges	$	53.6
Restructuring and Asset Impairment Charges (net of tax of $2.6 million)		(4.7	)
Net Income, As Reported	$	48.9

	Nine Months Ended 10/1/17
Diluted Earnings Per Share, Excluding Restructuring and Asset Impairment Charges	$	0.86
Restructuring and Asset Impairment Charges (net of tax)		(0.07	)
Diluted Earnings Per Share, As Reported	$	0.78

The impacts of changes in foreign currency presented in the tables are calculated based on applying the prior year period's average foreign currency exchange rates to the current year period.

The Company believes that the above non-GAAP performance measures, which management uses in managing and evaluating the Company's business, may provide users of the Company's financial information with additional meaningful bases for comparing the Company's current results and results in a prior period, as these measures reflect factors that are unique to one period relative to the comparable period.  However, these non‑GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States.  Tax effects identified above (when applicable) are calculated using the statutory tax rate for the jurisdictions in which the charge or income occurred.

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